State Charitable Solicitation and Registration, Part I: A Core (and Often Missed) Nonprofit Compliance Area
Fundraising is central to how most nonprofit organizations operate. What is less widely understood is that fundraising activity is regulated not only at the federal level, but also by individual states through charitable solicitation and registration laws. These requirements apply to many nonprofits, including relatively small or newly formed organizations, and they exist independently of IRS tax-exempt status—it is an often mandatory step each entity must take before soliciting donations in a specific state. Understanding charitable solicitation compliance is an essential part of responsible governance.
In broad terms, charitable solicitation refers to requesting or receiving contributions for charitable purposes. There is no single definition applicable to every state. But state statutes tend to define solicitation expansively, and it often includes—
direct mail, email, or social media fundraising appeals;
online donation pages and crowdfunding campaigns;
ticket sales for fundraising events;
telephone or text-based donation requests; and
requests for grants from private foundations or other funders.
Importantly, solicitation is not limited to in-person activity. In many jurisdictions, simply making a donation mechanism available to residents of a state may be enough to trigger compliance obligations.
Charitable solicitation laws are designed to protect the public and promote transparency. At a high level, these laws allow states to monitor organizations that raise funds from their residents, require disclosure of basic financial organizational and information, and deter fraud and misleading fundraising practices. From the nonprofit perspective, compliance helps establish credibility and demonstrates accountability to donors, regulators, and the broader public.
One of the most common misconceptions is that IRS recognition as a tax-exempt organization authorizes fundraising nationwide. But that is not the case. Federal tax exemption governs federal income tax treatment and donor deductibility. Charitable solicitation registration is a separate, state-level requirement. An organization can be fully compliant with the IRS and still be out of compliance with state fundraising laws.
While the specifics vary by jurisdiction, registration is commonly required when a nonprofit solicits contributions from residents of a state, contducts fundraising events in a state, or maintains an ongoing fundraising presence accessible to state residents. Many states require registration before solicitation begins, while others impose penalties for retroactive compliance. So, timing matters!
States often exempt certain categories of organizations, such as religious institutions, educational organizations, governmental entities, or very small charities. However, exemptions are not always automatic. Some states require organizations to affirmatively claim exempt status or file periodic notices to maintain it. Assuming an exemption applies without confirming the procedural requirements is a common and avoidable risk.
Charitable solicitation compliance is not merely administrative. It is a governance and fiduciary issue. Board directors and officers have a responsibility to ensure the organization complies with applicable law, particularly where noncompliance could result in penalties, reputational harm, or loss of fundraising privileges.
In Part Two, we will focus on how these rules apply to online fundraising and multi-state solicitation, including the widely referenced Charleston Principles.